Talk to Your Accountant about Taxes

5 Things You Need to Do Before Talking to Your Accountant about Taxes This Year

Tax season is here, making many small business owners groan at the idea of scheduling an appointment with their accountant for tax preparation. Whether you own a small business or you are an employee, taxes are unavoidable. But, there are more things that will need to be done if you are filing your personal taxes as well as your business taxes.

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If you have an appointment scheduled or you are getting ready to talk to your accountant, there are several things that you need to consider before the meeting.

Do-It-Yourself vs. Professional Tax Preparation

The first question to ask is whether you should file your taxes on your own or hire someone to help. Even if you have completed your personal taxes in the past, it is important to know that business taxes are a bit more complicated. Even if you feel comfortable filing your tax return, it is suggested that you work with a tax professional for all business-related tax questions and filings.

Remember, tax laws change every year. So, you need to be sure that you have an accounting professional who is keeping up with the trends to ensure that your business is compliant with the new laws.

There’s no reason for you to spend the time trying to decipher tax laws! Your time is better spent on growing and running your business. Outsource your tax preparation to save yourself a headache that often comes during this time of year.

Even if you are outsourcing your tax preparation, there are a few things that you can do to be ready for the meeting with your accountant. Here are five steps that should be followed before the meeting:

Step #1: Gather Tax Paperwork

If you are filing personal taxes as an employee, then you only need to worry about a W2 and a few other financial documents for the tax return. But, there are many other documents that will need to be gathered and provided to your accountant for a business tax return. You might receive 1099’s and other statements of income. It is also a good idea to bring forms showing details about your bank accounts, investment accounts, debt interest payments, and more.

This tax paperwork shows your accountant the financial map, helping them to see the annual picture of your business income and expenses over the course of the fiscal year. Providing the paperwork decreases the likelihood that a miscommunication will occur. With this information, the accountant can crunch the numbers and figure out the best strategy for filing your taxes.

You might provide them with a stack of paperwork and call it good. Or, you might have a summary page that maps out the accounts to provide an easy-to-reference sheet for the accountant to review. Talk to your small business accounting team to see if they have any specific requests about what information you should provide during your tax appointment.

Step #2: Provide Payroll Details and Estimated Tax Payments

How much did you pay in payroll and payroll taxes? These numbers are necessary for your business tax filing. If you were consistent with tracking financial information throughout the year, this should be as simple as running a report in your accounting software to provide to your accountant.

However, it is a good idea to do an audit to ensure the reporting information is correct. These internal audits should be performed on a regular basis to identify potential mistakes or errors that were made in payroll processing or during data entry. Identifying these problems before tax filing time can help you avoid problems later.

It is also important that you provide detailed information about any estimated tax payments that were made. These tax payments should include quarterly taxes as well as other tax expenses such as employment taxes. Your accountant can help you stay ahead of these payments all year long to ensure that you don’t miss any of the necessary deadlines.

Step #3: Details about Expenses and Tax Deductions

One of the most powerful benefits of owning a business is leveraging tax write-offs where appropriate. If expenses are business-related, you can write off those costs on your taxes and reduce the amount of taxable income that will be factored into the return.

What types of expenses can you write off? It varies, depending on the type of business. If you have a home-based business, there are a few things that your tax accountant might ask about, such as utility bills, mortgage payments, and cell phone usage so that an appropriate write-off can be calculated. Other write-offs include the cost of business development, equipment, a company vehicle and more.

Here is a list of potential expenses that you might be able to use as tax deductions:

  • Marketing or advertising costs
  • Local transportation, including a mileage log for your car
  • Travel costs, including airfare, meals, hotel, taxis, and any other costs that were incurred
  • Phone lines, including cell phones, VOIP, and land lines
  • Internet, computer, and software costs
  • Payments made to subcontractors
  • Insurance and certification premiums
  • Depreciation of old assets
  • Office supplies
  • Rental costs
  • Utilities
  • Professional expenses for consultants, accountants, and lawyers
  • Bank and credit card interest expenses
  • In-home office deductions
  • Payroll costs
  • Health insurance premiums
  • Estimated tax payments
  • Maintenance and repairs

This list is not comprehensive. But, it will give you a good idea about the types of expenses that your accountant will be asking about.

The best thing that you can do is talk to your accountant in advance about potential write-offs that should be tracked for the year. Keeping detailed records of all of your expenses will ensure that you can use the deductions where they are appropriate. In some situations, you might choose to strategically purchase equipment or furniture before the end of the year in order to minimize tax burden. Other times, it might make sense to wait until January rolls around so that those deductions are available for the next year.

Make sure that you have receipts and documentation to back up the purchases that happened throughout the year. These deductions can be problematic if you don’t have documentation in case an audit happens in the future.

Step #4: Summarize Cost of Goods Sold

If your business sold any goods, you would need to have details about your inventory, including the total beginning dollar amount, purchases, and the ending dollar amount. Materials and supplies expenses also need to be figured into the business financial documents, so that you can determine overall profits and tax burdens for the year.

These numbers might seem overwhelming if you don’t know a lot about accounting. That’s why it is essential to have an experienced tax team who can offer advice and support all year long. Don’t wait until tax season to prepare the information for your accountant! Instead, have a solid system in place that will be used on a daily, weekly, and monthly basis to ensure that you have all of the financial information that will be needed.

Step #5: Bring Your Questions

Taxes can be complicated, leaving many small business owners confused about how the numbers worked out. If you have questions during the tax preparation process, it is important that you talk with your accountant to help you understand the details of the filing. Even though your tax accountant is managing the numbers and the paperwork, as a business owner, it can be very helpful for you to at least have a basic knowledge about how the calculations are summarized for the filing.

There are times when your accountant might come to you asking for specific information. Keeping open lines of communication will ensure that you have a good team to minimize the tax burden and maximize the final results.

What types of questions should you ask? Anything goes! Full-service accounting provides you with a great resource that you can tap into all year long. So, don’t feel like you need to wait until it is time for tax preparation before you talk to your accountant about the questions that arise. Strategic accounting can minimize the stress during tax time and make it easier for you to gather the necessary information when it is time to file your taxes.

Talk to an Experienced Accounting Team

The annual tax deadline is drawing near, so be sure that you are ready to have your paperwork submitted by the deadline. April 15th is the standard deadline each year. But, since this date falls on a weekend, you will have until April 18th to file your Federal tax return this year. The due dates for state tax filing varies depending on your location. It’s always best to talk to your accountant to ensure that you don’t miss the local deadlines.

Do you need help with your tax preparation? Talk to a small business accounting team to get the best service that can be catered to meet your needs. These services will ensure the financial success of your company, helping you to optimize profits and prepare for the future. For more information, talk to our team here are Easier Accounting to learn about the services that are available: (888) 620-0770

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